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Avoid forming an accidental partnership

On Behalf of | Feb 20, 2020 | Business Law |

All businesses depend on networking. In the beginning, your business network and your social circle may have a significant amount of overlap.

As you launch your business, you may have people by your side who contribute to your business’s success. Although you appreciate their help, you may have a role in mind for them outside of being your partner. Unfortunately, if there is a misunderstanding about your collaboration, it can lead to a friend, family member, or other associate thinking they own part of your business as your partner.

Here’s how you can avoid creating an accidental partnership while still getting the help you need.

Temporary help vs. permanent solutions

The root of many accidental partnerships is a misunderstanding. When you bring someone into your business, be clear about everyone’s roles and expectations.

You can always offer to make someone a partner if you find your work styles are compatible and good for your business.  But if you treat someone like a partner too early, it can be difficult to untangle the relationship if you are not as fortunate.

Clear conversations can save you from expensive misunderstandings

Whether you intend for someone to help you until your business is stable, or if you have a long-term job in mind for them, be clear about what the role is and is not. Having an honest conversation early on can help you both be clear about your expectations. Make sure you talk about factors such as:

  • Their current role in the business;
  • How long you anticipate needing their help; and
  • Your honest assessment of the future of their role in the business.

You may feel like someone has a certain expectation and do not want to let them down if you do not want a long-term obligation. While uncomfortable, both you and your associate will have an easier time working together if you are clear about what you need from each other.

When roles are unclear and your associate’s duties start to make them look like a partner, they can make claims against your business or create financial liabilities your business cannot handle.